If you work in the UK, you will pay tax in the UK......

[moggy]

What you should really say is "British firms employing British workers must pay British taxes". Let's be clear here, it's the employers who are avoiding tax, not the employees....

As for a debt transfer happening - I don't think so because what they are doing is perfectly legal. Also, many of these workers are teachers and nurses so the debt would be transferred back onto the school/NHS which would be a bit of an own goal. Transferring it onto the offshore scheme provider (or even an umbrella/agency) runs the risk of instantly bankrupting the provider so no one would get paid that month which wouldn't be good for business either.

So what will happen is that they softly softly change the rules and people stop doing it from April 2014. People who did use these schemes now take a hit on their net income of about 5% as they switch to alternate payment schemes. It was good while it lasted but apparently tax avoidance does pay....

I agree with what you are saying, but with regards to transferring the debt to an agency, IMO this would instantly stop all agencies using or making payments to these schemes. This would significantly reduce the cost of chasing schemes that evolve quicker than HMRC can keep up with.

[Wanderer]

If you work in the UK, you will pay tax in the UK......

What you should really say is "British firms employing British workers must pay British taxes". Let's be clear here, it's the employers who are avoiding tax, not the employees....

As for a debt transfer happening - I don't think so because what they are doing is perfectly legal. Also, many of these workers are teachers and nurses so the debt would be transferred back onto the school/NHS which would be a bit of an own goal. Transferring it onto the offshore scheme provider (or even an umbrella/agency) runs the risk of instantly bankrupting the provider so no one would get paid that month which wouldn't be good for business either.

So what will happen is that they softly softly change the rules and people stop doing it from April 2014. People who did use these schemes now take a hit on their net income of about 5% as they switch to alternate payment schemes. It was good while it lasted but apparently tax avoidance does pay....

[moggy]

It will be interesting to see whether they decide to invoke debt transfer for anyone recommending these schemes

This I feel would be the end goal.

I wouldn't be surprised to find out that as eek suggests, they enquired based on the advertised rate, and the agency in question told them its this rate with this payroll provider. So so had little to no idea that it was an offshore scheme.

[eek]

And the saying goes that 'assume' makes an 'ass' out of 'u' and 'me'

Yes but its also an unfair allegation. I doubt the average teacher actually understands anthing regarding tax. They just see agency 1 pays x, agency 2 pays £x+20 and decide to use agency 2 how on earth are they going to know to ask about NI payments. I can understand them doing it now but before this trick was common knowledge you would have to be very paranoid.

[LisaContractorUmbrella]

It will be interesting to see whether they decide to invoke debt transfer for anyone recommending these schemes

[Nathan SJD Accountancy]

And the saying goes that 'assume' makes an 'ass' out of 'u' and 'me'

Thinking about it. I can see how assuming can get you in a whole lot of trouble. All employees trust their employers to make the correct and relevant tax deductions and most employees probably have no idea whether it was correct or not!

It isn't until you get a letter from HMRC changing your tax code that you know there was an 'underpayment'.

[The Spartan]

And the saying goes that 'assume' makes an 'ass' out of 'u' and 'me'

[eek]

I think people were signing up to these pay schemes based somewhere like Jersey so the provider didn't have to pay Employer's NI and thus the worker could increase their take home pay (and the provider taking a nice cut too no doubt). However, the worker may not have been aware of the way the scheme operated....

I believe many people signed up on the basis that they say a headline rate of £170 a day rather than £150 and didn't know the questions they needed to ask to find out how it occurred.

I guess they just assumed the end client was paying more.

[Wanderer]

'In many cases the employee is unaware that their payroll is located offshore and tax is being avoided.' Really?

I think people were signing up to these pay schemes based somewhere like Jersey so the provider didn't have to pay Employer's NI and thus the worker could increase their take home pay (and the provider taking a nice cut too no doubt). However, the worker may not have been aware of the way the scheme operated....

[Nathan SJD Accountancy]

Thanks for this Lisa... interesting quote from the link.

'In many cases the employee is unaware that their payroll is located offshore and tax is being avoided.'

Really?

[LisaContractorUmbrella]

Government to give HMR&C new powers to combat offshore tax avoidance Government announces new measures to block tax avoidance involving offshore employment intermediaries - HM Treasury